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American Tower Touches 52-Week High Amid Multiple Risks

Shares of Boston, MA-based, leading international wireless tower operator, American Tower Corp. (AMT - Free Report) hit a new 52-week high of $146.09 during the trading session on Aug 25, before closing a tad lower at $144.24.

Over the past 52 weeks, American Tower’s shares have ranged from a low of $99.72 to a high of $146.09. The average volume of shares traded over the last three months is approximately 1.6 million. The stock has a market cap of $61.72 billion.

Comparison with Broader Industry

Over the last three months, the price performance of American Tower has been impressive. The stock has soared 10.01%, outshining the industry’s gain of 0.81% over the same time frame.

When compared to the market at large, the stock’s performance looks favorable, as the S&P 500 index and the broader Finance sector (which houses American Tower) has rallied 0.86% and 4.36%, respectively.

Taking the stable performance of the stock into consideration, we expect American Tower to scale higher in the coming quarters.

Positive Earnings Surprise

This Zacks Rank #3 (Hold) company delivered a positive earnings surprise of 4.35% in the last reported second quarter of 2017 result. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in all of the previous four quarters, with an average earnings beat of 3.91%.

Catalysts Behind the Upsurge

American Tower continues to benefit from increased investment of wireless carriers in 5G networks. Next-generation 4G LTE and 5G networks along with increased usage of smartphones and tablets are boosting demand for tower leasing. Additionally, the company’s increased investments in Asia are paying off.

We believe that the company’s tower buyouts in emerging markets have driven its top line and lent it a competitive edge. American Tower’s Indian, EMEA and Latin American operations account for almost 50% of its organic core revenue growth. Notably, within the Property segment, revenues from the United States totaled $897 million (in second-quarter 2017), up 8.07% year over year. Meanwhile, total international revenues amounted $741million, up 24.12% year over year. Within this, revenues from Asia came in at $295 million, increasing a whopping 31.11% year over year. EMEA revenues grossed $160 million, up 18.52% year over year. Latin America revenues totaled $287 million, up 21.09% year over year. The company’s total revenue from international business is likely to outperform revenues from the United States in the next three to seven years.

American Tower continues to generate most of its revenues from long-term (typically 5-10 year) tower leases with major wireless carriers. Further, the company provides on-site maintenance as well as servicing of antennas, amplifiers and base station equipment. The $100-million tower lease agreement with U.S. telecom behemoth AT&T Inc. (T - Free Report) has helped the company raise 2017 revenue guidance.

We are also impressed with American Tower’s efforts to reward stockholders with a quarterly cash distribution of 64 cents per share on shares of its common stock. The distribution will be paid on Jul 14, 2017 to stockholders of record at the closure of business on Jun 19, 2017.

All these above factors played a pivotal role in driving the company’s share price to a new 52-week high.

A Broker Favorite

We note that earnings estimates for American Tower have exhibited a healthy uptrend. Over the last 60 days, the Zacks Consensus Estimate of earnings for full-year 2017 has jumped 1.51% to $6.71 per share.

Given the wealth of information at the disposal of brokers, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.

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